I, Introduction
When software engineers Reed Hastings and Marc Rudolph founded Netflix in 1997, video rental stores dominated the home entertainment market. Hastings was frustrated that the market was not customer-friendly, with charging the customers high fees for late returns as the culprit. They saw an opportunity to do rentals differently and Netflix began renting out DVDs by mail in April 1998, which was a game changer in the video-renting market.
However, times have changed. Netflix accepted in 2007 that the DVD rental business was not profitable enough anymore. They understood that people not only want to rent videos but also want to pay for a large and user-friendly offering, for the comfort of ordering a video from your couch and for no hassle with returning videos. They foresaw the change, used their IT-background to create fitting digital solutions and rolled it out in a lean way. From there, they built an online streaming service platform to be able to meet the needs and preferences of customers
Netflix's big change in its business strategy has made all the plans of the departments change and the HR department is no exception. So let's try to find out what changes Netflix has made in recruiting, training and some other related issues.
II, How Netflix’s shift changed its required workforce
Netflix is unquestionably one of the greatest success stories in recent history. The company has undergone significant changes in response to shifts in technology over the years. The change from selling DVDs to online streaming services has led to a shift in the way Netflix operates and have had a significant impact on the skills and knowledge required by its workforce:
Streaming technology: With the rise of high-speed internet and improvements in streaming technology, customers have increasingly turned to streaming services like Netflix for their entertainment needs. It was 2007 before internet speeds got fast enough, and personal computers got powerful enough, to allow streaming services to take off commercially. Netflix came out with a streaming service that year. This has led to Netflix shifting its focus away from its original DVD rental model to a streaming-first approach. This has required the company to develop and maintain expertise in the area of streaming technology. Netflix has had to hire and train employees with skills in video encoding, content delivery networks, and cloud computing. This has allowed the company to ensure that its streaming platform is reliable, fast, and able to deliver high-quality content to its users.
Mobile devices: With the increasing popularity of mobile devices, Netflix has also shifted its focus towards optimising its platform for mobile viewing. This includes developing a mobile app that allows users to easily access and stream content on their smartphones or tablets. With the growing popularity of mobile devices, Netflix has had to ensure that its platform is optimised for mobile viewing. This has required employees with skills in mobile app development, user experience design, and mobile optimization. This has allowed the company to provide a seamless and enjoyable viewing experience to users on mobile devices, which has helped to increase engagement and retention.
Overall, these changes in the way Netflix operates have required the company to hire and develop employees with a diverse range of skills and knowledge. This has allowed Netflix to stay agile and adaptable in response to changing market conditions and to continue to innovate and grow its business.
III, How Netflix changed its hiring to achieve the required workforce
When Netflix shifted from renting DVDs to streaming services, it had to hire a significant number of new employees with the right skills to help build and operate its streaming service. To do this, Netflix used a combination of traditional hiring methods and innovative approaches.
One of the traditional methods Netflix used was to post job openings on its website and on popular job boards like LinkedIn and Glassdoor. These job postings explained the requirements for the positions and asked for resumes and cover letters from interested candidates. Netflix also used recruiting agencies to find candidates for certain positions, such as engineering and technical roles.
However, Netflix also employed some innovative hiring methods. For example, around 2005, it was evident to Reed Hastings that Netflix was a hit and it wouldn’t be going anywhere for a long time to come. He knew that company culture can begin very quickly. From the smallest, earnest start-up to established multi-nationals so it’s imperative to get this right from the start so he introduced a "Netflix Culture Deck" which explained the company's values and expectations of its employees. This document was widely shared and helped to attract candidates who were a good fit for the company.
Overall, the Culture Deck had a significant impact on Netflix's hiring process by helping to attract candidates who were a good cultural fit, setting expectations for new hires, and reinforcing the company's culture among existing employees.
Moreover, Netflix also used a unique approach to hiring software engineers. The company created a contest called the "Netflix Prize in 2006," which offered a $1 million cash prize to anyone who could improve the accuracy of Netflix's recommendation algorithm by 10%. The competition attracted thousands of participants from around the world and helped Netflix to identify and recruit talented engineers who were interested in working for the company.
The Netflix Prize was a unique approach to hiring that allowed the company to identify individuals who had the technical skills and passion for innovation that were necessary to build and operate the company's streaming service. By offering a cash prize, Netflix was able to attract a large pool of talented engineers who were interested in solving a difficult technical challenge and potentially winning a significant amount of money.
The competition also allowed Netflix to showcase its technical expertise and innovation to the broader tech community, which helped to raise the company's profile and attract more talented individuals to the company. The Netflix Prize was widely covered by the media and generated a lot of buzz in the tech community, which helped to establish Netflix as a leader in the streaming industry.
Overall, the Netflix Prize was an innovative approach to hiring that allowed Netflix to identify and recruit talented engineers who were passionate about innovation and solving difficult technical challenges. The competition helped to establish Netflix as a leader in the streaming industry and motivated and retained existing employees.
IV, How Netflix changed its training to achieve the required workforce
Netflix prioritised customer service in its early stages, providing extensive training to its customer service representatives on soft skills such as active listening, empathy, and conflict resolution. The company relied heavily on in-person and on-the-job training to develop employees' skills and knowledge, with new hires receiving classroom instruction and hands-on practice. Reps continued to receive training and coaching from experienced leaders and supervisors, leading to a highly skilled and motivated team that played a vital role in Netflix's success in the DVD rental industry.
Due to its shift to a streaming platform, it became clear that new skills and competencies were needed, and Netflix had to adapt its training programs to support the new business model and the digital entertainment industry.
Increased emphasis on technology and data analytics: As the company shifted its focus to streaming, it became essential to have employees with expertise in areas such as software development, data analysis, and online content delivery
Netflix started to develop new training programs focused on developing technical skills related to streaming technology they need to perform their roles effectively. For instance, engineers and developers receive training on software development, while customer service representatives receive training on how to solve technical issues related to streaming, such as buffering, error messages, and connectivity problems. These skills were not just relevant to the DVD rental market but also to the new streaming platform.
The company offers technology workshops that cover a range of topics, such as cloud computing, data analytics, and machine learning. These workshops are designed to help employees develop a deeper understanding of emerging technologies and their applications in the entertainment industry.
Greater focus on creative skills training: Netflix must continuously develop new technologies and approaches to maintain its competitive edge in the streaming platform and personalised recommendation system.
Storytelling Workshops: Netflix has developed workshops focused on storytelling, which help employees develop their skills in writing, producing, and directing. These workshops are designed to help employees learn how to tell compelling stories that resonate with audiences, and Netflix is able to produce high-quality content that resonates with audiences and sets the company apart from its competitors. One example is the hit series "Stranger Things" created by the Duffer Brothers, who were mentored by Netflix executives during a creative development program that originated from the company's storytelling workshops.
Hack Day: Hold twice a year, where employees are encouraged to work on innovative projects that can potentially enhance the company's products or services. This event provides employees with the opportunity to experiment with new ideas and develop their creativity skills in a fun and collaborative environment. One of the most famous successful projects is Netflix Switch, a physical button that simplifies the process of getting ready to watch Netflix and creates a fun and interactive experience for users.
Priority on personalised learning and development, with an emphasis on employee upskilling and career advancement: The "Netflix style of learning" involves providing personalised training content through a learning management system (LMS) and assigning courses based on factors like location and role. Internal training methods are also tailored to each employee's needs.
Netflix shifted to a digital-first training approach, with a greater emphasis on online learning resources, virtual training sessions, and other digital training tools. Netflix has partnered with some online learning platforms such as LinkedIn Learning, Pluralsight, Udemy to provide employees with access to a wide range of courses and training materials. This technology-driven approach gives employees the ability to choose the training resources that are most relevant to their specific needs and interests, rather than being limited to a one-size-fits-all training program.
Netflix uses data and analytics to measure the impact of training on employee performance and business outcomes and to identify areas for improvement. Its digital approach enables personalised learning experiences based on individual learning styles, preferences, and skill levels, with customised online courses and videos providing tailored training at the employee's pace.
Netflix Guilds are internal employee groups focused on shared interests or expertise, providing a forum for knowledge sharing, mentorship, and collaboration opportunities. They offer a supportive environment for continuous learning, allowing employees to develop skills, stay current on trends, and maintain a skilled and adaptable workforce.
V, How Netflix changed its performance management to achieve the required workforce
When Reed started Netflix, he had this question, this experiment in his mind, which was: “Would it be possible, if he created an organisation that was made up entirely of top performers?” It is not so easy, but Netflix has figured it out. They have decided to focus on effective employee performance management.
Performance management is critical to ensure that employees are both active and motivated at work and the output of the employees meets the goals and objectives of the organisation. By setting clear performance expectations and providing regular feedback, Netflix can help employees understand how their work contributes to the company's success and identify areas for improvement in response to changes in technology and customer preferences.
Coming to performance management, Netflix has a unique performance management system that is centred around the idea of "freedom and responsibility".
This system at Netflix is structured around four main components: goal setting, feedback, compensation, and development planning. The goal-setting process involves identifying and setting specific, measurable, attainable, relevant, and time-bound (SMART) goals for each employee. Continuous feedback is provided throughout the year and is intended to be helpful rather than punitive. Compensation is tied to individual and team performance, and development planning helps employees identify opportunities for growth and development. In general, the performance management system is based on a few key principles, including transparency, simplicity, and continuous improvement.
They don’t set a certain KPI to measure employees’ performance but consider what’s best for the employee and the company. Since not using a measurable KPI, Netflix can be where they are today. Netflix believes that an evaluation system can be an obstacle for employees when they want to take risks and be creative because they know what goes into the boxes that can help them win the project, which can increase its employees' skills and expertise. Furthermore, Netflix's performance management system assists the corporation in responding to technological and user preference changes. The organisation can immediately discover areas where employees need to enhance their abilities or learn new things by offering regular feedback. This enables Netflix to react to changing market conditions while remaining competitive.
In order to support its performance management system, Netflix uses a variety of performance management tools. Ditching the annual performance reviews, Netflix encourages employees to take part in a real-time performance review by freely writing feedback in a text box to anyone, from interns to chief executives in the company, which is called 360-degree reviews. With this new structure, employees are advised by their colleagues on what they should stop doing, start doing, or continue doing. The managers will give feedback on the strengths and weaknesses of the subordinators, the colleagues will give opinions to each other about how to improve.
According to Reed Hasting, the goal [of 360 written feedback] is to help everyone get better, not to categorise them into boxes. Each person can now give feedback to as many colleagues as they choose at any level in the organisation - not just direct reports, line managers, or a few teammates who have invited input. Most people at Netflix provide feedback for at least ten colleagues, but thirty or forty is common and even the executive chairman of Netflix - Reed Hasting received comments from seventy-one people in his 2018 report. Because of that, it makes the employees accountable and conscientious and keeps them “moving” all year round not just at a certain period of time.
The second tool is “the Keeper test” which is a brutally honest measure of this sentiment.
This test is basically for managers: if an employee were leaving to go to another company, would the manager try to change their mind to keep them? The company will keep that employee if they are still a good fit; if they are not a good fit, give them a severance package of up to six months now and let them find a better fit elsewhere. While the Keeper test does not necessarily improve employees' skills and knowledge directly, it does help Netflix identify and retain talented individuals who can contribute to the company's success and growth. Netflix's workforce is like an Olympic team, said Erin Meyer: Those who wish to join the top team will have to be top performers, and they'll have to push themselves hard to get that spot. This idea might sound harsh but it can motivate the employees to keep learning and “moving forward”. In addition, by identifying promising individuals, Netflix can then focus on providing them with training and development opportunities to further enhance their skills and knowledge, especially in an era characterised by rapid technological advancements and ever-evolving changes in people's preferences.
In conclusion, Netflix's performance management system is designed to support the company's high-performance culture and improve the skills and knowledge of its workforce. Netflix's performance management system also helps the company respond to changes in technology and customer preferences by identifying areas where employees need to improve their skills or acquire new knowledge.
VI, Conclusion
In conclusion, this essay has explored the importance of adapting to changes in technology and customer preferences in order to remain competitive in the market. With the rapid pace of technological advancement and the ever-changing demands of customers, it has become crucial for businesses to stay ahead of the curve and embrace new technologies and trends.
The case of Netflix's transition from a DVD rental service to an online streaming platform exemplifies the significance of this adaptation. By recognizing the shift in customer preferences towards online streaming and investing in the necessary technology, Netflix was able to not only survive but thrive in a highly competitive market.
Although the change in business strategy from selling and renting DVDs to online streaming has caused the departments in general and the HR department in Netflix in particular to have big changes in both goals and operating methods. For example, a change in recruitment such as devoting resources to be able to recruit personnel with technical expertise and understanding to serve the change to online streaming or training and supporting old employees with skills. new so that personnel can understand and contribute to the goals and plans in the near future that the company wants to implement in the future. In addition, the company also provides a number of other functions so that personnel can improve their own capacity and refresh and increase creativity in their own daily work.